FEDERAL EARNED INCOME CREDIT (EIC)
Earned Income Credit: Frequently Asked Questions
NOTE: Glossary words are highlighted. Click on any glossary word to see its definition.
What is the difference between the Earned Income Credit and Earned Income Tax Credit?
There is no difference between the Earned Income Credit (EIC) and the Earned Income Tax Credit (EITC). They refer to the same program. EITC is an older term, but still commonly used.
Do I have to be working now to claim the EIC?
If you were employed and had earned income in the tax year for which you are claiming the EIC, you meet the earned income requirement for the EIC. You do not have to be working now.
Does the EIC affect my eligibility for SNAP food stamps or other forms of assistance?
The EIC does not affect your income eligibility for assistance programs such as SNAP food stamps, TAFDC, or Section 8 rental assistance. However, if you do not spend your EIC payment within a certain period of time, it may be counted as an asset and could affect your eligibility for benefit programs that have asset limits.
Can legal immigrants claim the EIC?
Immigrants who are working in the country legally may claim the EIC if they meet the other EIC eligibility requirements. To claim the EIC, legal immigrant workers must have a valid Social Security number that allows them to work in the United States. An immigrant worker’s main home must be in the United States. Also, immigrant workers’ children must have lived with them in the United States for more than six months out of the year to be considered qualifying children.
If I am eligible, do I have to wait until next year to get the EIC?
You must wait until you file your tax return to get your EIC payment for the previous year. The Advance EIC that allowed some workers to get partial payments of the EIC in their paychecks throughout the year was repealed in 2010.
What happens if I make a mistake or provide false information in claiming the EIC?
You may face a penalty if you claim the EIC when you are not eligible for it:
If you make a mistake, not on purpose, in claiming the EIC, the IRS will most likely correct the error or ask you for correct information without penalty.
If the IRS finds that you made a reckless error or didn't follow the EIC rules on purpose, the IRS can deny your current EIC claim and prohibit you from claiming the EIC for the next two years.
If the IRS finds that your error was due to fraud, meaning you intentionally provided false information to the IRS when you filed your claim for the EIC, the IRS can deny your current EIC claim and prohibit you from claiming the EIC for the next 10 years.
What if I need more time past April 15th to file my tax return?
If you need more time to file your return with the IRS, you can get a 4-month extension using Form 4868. Form 4868 is available on the IRS web site: Form 4868: Application for Automatic Extension of Time To File U.S. Individual Income Tax Return. You should apply for the extension by April 15th to avoid penalties.
When you file Form 4868, you do not have to give a reason why you need more time. The IRS will approve the extension automatically. However, the filing extension does not give you extra time to pay your taxes. If you owe any taxes for the tax year, you must estimate the amount you owe and submit payment when you apply for the filing extension.
If you need more than a 4-month extension, you must let the IRS know why you need more time. You can find instructions for requesting additional time on Form 4868.